It's not difficult to understand, it's tracking error regret. I have good data as well and just looking back from 2020-2024 it's easy to spot.
Here is my individual returns breakdown:
US Equity Returns: 14.41%
Equity Returns: 11.73%
Intl Equity Returns: 5.82%
S&P 500 Index: 14.47%
Total Intl Index: 4.28%
If I focus on total equity returns, then while an average of close to 12% annualized looks excellent, it pales in comparison to US Equity alone. Then you break further into Intl returns alone, it is downright disappointing to see that low number. While it's all positive and above bonds, it's not as good as the S&P 500, and everyone benchmark themselves to market.
This is what happens when people who cannot tolerate tracking error should not deviate, but then all you can do is invest in S&P 500 or Total Stock Index. While it may bring unhappiness when S&P 500 is doing poorly too, it's not so much of a regret behaviorally because it's the market and you're in it with everyone else too suffering. The pain of losing while diversified away from the market is larger.
Here is my individual returns breakdown:
US Equity Returns: 14.41%
Equity Returns: 11.73%
Intl Equity Returns: 5.82%
S&P 500 Index: 14.47%
Total Intl Index: 4.28%
If I focus on total equity returns, then while an average of close to 12% annualized looks excellent, it pales in comparison to US Equity alone. Then you break further into Intl returns alone, it is downright disappointing to see that low number. While it's all positive and above bonds, it's not as good as the S&P 500, and everyone benchmark themselves to market.
This is what happens when people who cannot tolerate tracking error should not deviate, but then all you can do is invest in S&P 500 or Total Stock Index. While it may bring unhappiness when S&P 500 is doing poorly too, it's not so much of a regret behaviorally because it's the market and you're in it with everyone else too suffering. The pain of losing while diversified away from the market is larger.
Statistics: Posted by Elysium — Mon Jan 13, 2025 2:04 pm